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Family Office, Others Back Singapore-Based Venture Debt Fund

Tom Burroughes

28 May 2019

Genesis Alternative Ventures, a Singapore-based firm, has reportedly launched a venture debt business to back start-ups in Southeast Asia.

The Business Times (of Singapore) and other outlets reported that the company intends to raise $70 million over the next 12 months.

One of the main investors is Sassoon Investment Corporation, the family office of the Sassoon family, who own shareholders of The Coffee Bean & Tea Leaf. Another key investor is PT Bank CIMB Niaga. CIMB Niaga is the second-largest private national bank in Indonesia by assets.

Venture debt is a form of financing for young high-growth businesses that are gaining traction and need to extend their cash runway in order to get to the next stage of growth. These companies may lack the cashflows or track record to meet the traditional criteria for bank loans, or their founders may wish to minimise equity dilution, the reports said.

WealthBriefingAsia has contacted Genesis for further details and may update in due course.

The BT story said that in 2018, a record $11 billion went to tech companies, almost double that of the $5.8 billion invested in 2017. Singapore and Indonesian companies received the lion's share of the funding last year.

Genesis was founded last year by partners Dr Jeremy Loh, Ben J Benjamin, and Martin Tang.

Benjamin is the son-in-law of Sassoon family patriarch, Victor Sassoon, and non-executive director of Israel-based online venture capital platform, OurCrowd Singapore. Dr Loh and Tang led DBS Venture Growth Partners, specialising in venture debt from 2015 to 2018.

On its website, Genesis explained venture debt as follows: "Venture debt first emerged in the 1970s in the form of simple equipment financing transactions and were primarily collateral driven until the mid-80s where the concept of using an `equity kicker' to increase yield in order to balance higher risk profiles. In 2016, global Venture Capital funds invested $26 billion into companies with at least $2.5 billion representing venture debt, nearly 10 per cent of the overall market."

"Here in Southeast Asia and notably Singapore, venture debt financing gained prominence in 2015 and is fast becoming a staple of alternative financing to fill a capital gap left void by traditional financial institutions. This method of funding is particularly effective for rapidly growing innovative businesses in need of external investment to underpin their next stage of growth. Young businesses with a limited or no track record of profitability usually struggle to borrow money from conventional sources, even where they have exciting prospects. Banks are generally wary of the risks posed by these start-ups and tend to steer clear, creating a financing gap which Genesis Alternative Ventures seek to fill."